November 12, 2004
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Joseph Gillis Jr.
You can do something!
At first glance, the stories on page C2 and C3 of the November 12 Boston Globe are just telling many people what they already know - some businesses are doing much better (Dell profits soar 25% in 3d quarter) and some are doing much worse (Delta Pilots OK 32.5% pay cut).
Many people do not like to think of municipal or school government to be like business; they may even become upset by the mere mention of business models. However, as the budgets, number of employees, breadth of services provided all increase, municipal government must begin to act like a business.
Some interesting quotes from the Delta story: "Delta Air Lines pilots...agreeing to slash their salaries by more than $1 billion annually and forgo pay raises through 2009." "Delta Pilots are currently among the highest-paid in the nation" "Delta has lost more than $6 billion since early 2001, during which time it has eliminated 16,000 jobs and cut the pay of other employees, including its executives."
From the Dell story: "Dell Inc. said its profits surged 25%... Revenue rose 18%" "27% growth in Europe, Middle East and Africa; Asia Pacific and Japan grew by 25%." "...particularly pleased with the printer business ... the most successful start-up business we've ever had at Dell."
Delta Air Lines provides one service - providing a means of transportation for people to get from one place to another. No diversification, they compete with other air lines for your travel needs. Newer air lines have come into the market without the baggage of Delta's existing business plan (gate fees, advertising budgets, overhead, personnel costs) - and are beating Delta in the pursuit of a customer's travel dollars. Their only revenue source is shrinking, and it has forced the company to make many hard decisions.
Dell has consistently looked to other areas to maximize revenue and profits. The products must be able to fit into their business model (like not starting to sell coffee), but allow the company to even out the peaks and valleys of any individual product line. They are not just a home PC maker - that consumer portion is only 15% of company revenue. They have looked to other sources to continue to generate income. And they are a success for their efforts.
